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Stuart J
Stuart J, Solicitor
Category: UK Bankruptcy Law
Satisfied Customers: 20185
Experience:  PGD Law. 20 years legal profession, 6 as partner in High Street practice
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Our home has a large Interest only mortgage on it. As we lost

Customer Question

Our home has a large Interest only mortgage on it. As we lost our business in 2008, our business loan that was secured against the residential property was passed to the Recoveries section of Lloyds TSB, who now say, (merely in the last month) that they have reviewed our "concessionary" arrangement & have decided that according to our most recent Income & Expenditure form, we can no longer afford to repay the debt we have with them & that we have until May 8th to see if we can remortgage/borrow more money to repay them in full, or else thay will instruct solicitors to take action. They have said that we should be looking to sell our home within 6 months. We have pointed out that the sale of the house would possibly only fulfill our mortgage debt & leave nothing else for them. Can they actually force us to put our house up for sale, as we are continuing to maintain our mortgage payments ok & are only in arrears to TSB to the sum of £340 (one payment) ? Please advise us.
Submitted: 1 year ago.
Category: UK Bankruptcy Law
Expert:  Stuart J replied 1 year ago.


What other arrears have
you had over the period?

What size is the mortgage?



Why is this a concessionary arrangements?



Has the interest only period come to an end and you are now
rolling over?



We need the full background history please

Customer: replied 1 year ago.

I shall reply to your request tomorrow,as I am out of home today, sorry. i believe that we may have had approx 2k arrears on the original bank loan since 2009, but I believe all they want clarified now is how much we can afford to pay, HOW we will pay it reasonably, & being able to satisfy their request for a shorter repayment time. I believe they may accept the original £400 pm, unsure for how long at the mo. I understand there is Interest applied & it is now not being considered as a loan, as I originally explained. Ithas been passed to Debt Recoveries. LTSB say it is a concessionary arrangement. Why, I do not know!! PLEASE EXPLAIN WHY THEY NOW THINK THEY MAY BE ABLE TO DEMAND THE SALE OF OUR PROPERTY, ESAPECIALLY WHEN WE ARE MAKING OUR MORTGAGE REPAYMENTS SATISFACTORILY & LTSB ARE 2ND IN LINE FOR ANY MONIES.


Mortgage is £202,000 which of course we shall now no longer be able to repay, so we are well aware that we are residing at our property until "pay day" is due, when we shall sell & repay lender & should be able to pay residue of debt to bank (as long as Interest Rates do not rise with any large amount in the forseeable future)


 


I believe there are now many people in this sort of situation.


 


Thankyou in anticipation of some advice !


 


debbie

Expert:  Stuart J replied 1 year ago.




The problem that you face is that once you are in arrears you are in breach
of your mortgage conditions and the whole loan becomes immediately repayable.

If they pass it to solicitors, legal costs will start to accrue even
though, with only £2000 of arrears, there is little chance that they would get
repossession. Nonetheless, the legal costs will be substantial



If you want to keep this out of court you need to pay the arrears
completely up-to-date and make sure that all future payments are paid on time.



If you do that, and they still blindly take you to court you can defend it
on the basis that they have no grounds to repossess the property and you can
ask the court to order that the lender gets no legal costs and is not allowed
to add any legal costs on to your bill/mortgage account.



I am a bit concerned as to why you say that LTSB are second in line for any
money because they should be first in line and should have a first charge. Do
they not have a first charge?



Can I help further?



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Stuart J, Solicitor
Satisfied Customers: 20185
Experience: PGD Law. 20 years legal profession, 6 as partner in High Street practice
Stuart J and 2 other UK Bankruptcy Law Specialists are ready to help you
Customer: replied 1 year ago.


You seem to have completely misread our info. We have a mortgage with another company - payments are up to date & all ok, as I told you.

 

LTSB was a secured business loan, against the house, therefore 2nd charge, not 1st

 

if you cannot understand what I have said, just say so!

 

We are NOT in arrears with mortgage

Expert:  Stuart J replied 1 year ago.

You said "only in arrears to TSB to the sum of £340 (one payment) ? "

Then you said

We are NOT in arrears with mortgage

I cannot answer with inaccurate facts.

Opting out for another expert

Expert:  Senior Partner replied 1 year ago.
Hi I see my colleague has opted out. I am afraid that if you gave security by way of second charge over your property and the business loan is in default - which I am sure it is if your business has ceased trading then the bank can enforce its security. The fact that the enforcement of that security may realise next to nothing for them is not really relevant from a legal perspective. A second chargee can enforce his security even if it ranks behind another charge. All that means is that when the property is sold the first charge has to be paid off before any money goes to the second charge. Of course it makes no sense and they would be better of to accept whatever payments you offer . It is however a matter of negotiation. If the bank exercises their security it will certainly put your first mortgage into default even if you are upto date with the payments because there will be a provision that makes foreclosure of a second charge a default.
Customer: replied 1 year ago.

At least you have given me an answer that seems to be based on the facts I have presented. many thanks for this, I shall check back with you later if that is ok. I have , in the meantime, been able to secure myself a management opp. with Tesco, that should make our bargaining opp more sound.


My main ? as you have understood, is that I needed to know if the Bank (2nd charge) could actually force us to sell so they might get monies, even though the mortgage with another company is fine & up to date.


 


Thanks


Speak later


 


Debbie

Expert:  Senior Partner replied 1 year ago.
Yes it is fine come back when you are ready.. I shall however be travelling tomorrow and wednesday so may not be able to respond immediately.

I can confirm that sadly the second mortgagee can force a sale.
Customer: replied 1 year ago.


Many thanks for clarifying that the bank can, in fact, force us to sell (although they probably will not get their money, as you say)


 


We shall now proceed again with discussions concerning increased payments.


 


Thankyou

Expert:  Senior Partner replied 1 year ago.
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